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Do Our Expectations Cloud Our World?

In strategic decision making, we have certain expectations about the world and how it behaves. In order to find your blue ocean, you are on the lookout for distinguishing elements.

The aim is to make competition irrelevant by carving out for yourself a hopefully close to inimitable competitive advantage. These processes are often similar to paradigm shifts in sciences. These shift describe the advancement from one paradigm, e.g the sun circulates the earth, to another, e.g. the earth circulates the sun.

Thomas Kuhn has examined this process in his book “The Structure of Scientific Revolution” in detail. One of his hypotheses is that a change in paradigm cannot be brought about with crisis. When an anomaly is discovered in research, it is “not by itself sufficient for paradigm change”. He goes further and says that “novelty emerges only with difficulty, manifested by resistance, against a background provided by expectation”. To exemplify this, he cites a study by J.S. Brunner and L. Postman “On the Perception of Incongruity: A Paradigm” where subjects are shown ordinary playing cards mixed up with some anomalous cards, like a black four of hearts. The results have shown that subjects initially see what they expect to see (either the four of spades, or the four of hearts) and when they recognise the novelty, they are often surprised by it. Therefore, expectations help to recognise anomalies but we are usually not trained in exploring them with an open mind.

When a novelty, first of all an anomaly, is observed we usually try to place it in context and adapt the explanation to our current theories. However, most managers will not take the next step to consider amending the theory and instead amend the experiment until it suits their expectation. Although this process description is fairly abstract in its nature, it is invaluable for the innovation strategy process. In order to reach your blue ocean, you will have to ask yourself the question whether you can achieve it by merely innovating iteratively or whether it is necessary to follow a more revolutionary type of strategy which might also involve changing your view of the market.

Lets take a look at the Netflix holiday policy as an example of internal process innovation. The company is not tracking holidays for the majority of its employees, depending on their career level, since it believes that the individual is capable of making a responsible decision when given the freedom to decide. This policy example is widely used in academia as well as during strategy conferences. More interestingly, it is an indicator of a paradigm shift from the initial expectation of “If employees are given the freedom to take as many holidays as they want, they will not come to work” to an expectation of “When employees are treated with respect and given the decision capabilities, responsible decisions are observed”. This is a good example of how sometimes it is more fruitful to change your assumptions based on evidence observed.

So do our expectations cloud our world? Expectations are necessary for every advancement process because blue oceans are hard to spot on blue horizon but it is easier if we have white clouds of expectations demarking them. Nevertheless, it is crucial to remain willing to adapt your perception according to the results of your experiments.